Executive Termination & Benefits

Overview

Civil Litigation

Counseling

Overview

Zuckerman Spaeder LLP has a growing practice representing high-ranking employees and companies in disputes that can arise at the end of the employment relationship, including disputes over severance pay and benefits, change in control benefits, covenants not to compete, confidentiality agreements, indemnification agreements, and trade secrets. We have secured favorable resolutions to these types of disputes for our clients, and always keep in mind the impact of litigation on the client’s reputation, current activities, and future business prospects, beyond simply the millions of dollars that may be at stake. We have also counseled numerous executive-level employees and companies on employment-related and compensation issues.

In Zuckerman Spaeder’s legal blog, Suits by Suits, our lawyers in this practice group stay on top of the shifting legal landscape and share legal and practical lessons for navigating the issues that are presented when executives and companies part ways.

Experience Highlights

$5.3 Million Jury Verdict for Ousted Online Banking CEO

The firm brought a number of claims on behalf of the former CEO of a pioneering online banking company who had been forced out by a large investor. After an 11-day trial, our client was awarded a verdict of $5.3 million. The case was recognized by Virginia Lawyers Weekly as one of “Virginia’s Largest Verdicts of 2011.”

Former CEO in Arbitration Over his Employment Agreement

The firm was co-counsel to the former CEO of a public company in arbitration over the benefits due him under his employment agreement. The arbitration, which began in 2003, was suspended until 2010 while a complex criminal prosecution proceeded. The government contended that it could restrain and forfeit the client’s assets needed to pay his legal fees. Zuckerman Spaeder defeated that claim, along with the company’s argument that it only had to advance fees for the client’s Washington, DC and New York lawyers at “local rates." In 2011, on the eve of the final hearing, the arbitration was successfully concluded by an agreement providing the client approximately $40 million, including $3 million in reimbursed legal fees.

Former CEO of Large Real Estate Company in Dispute with Purchaser of Company

Zuckerman Spaeder represented the former CEO of a large national real estate company in a dispute with the purchaser of the company. The purchaser contended that our client had to reimburse bonuses that the company awarded him in prior years because the bonuses were based on earnings that were later restated. The dispute was mediated and eventually settled on terms favorable to our client.

Accountant Seeking Tort ‎Claims Against Former Employer After Being Kidnapped and Tortured Working Abroad‎

In 2008, Zuckerman Spaeder employees prevailed on behalf of plaintiff Azhar Khan’s rights to pursue his tort claims against his employer in court despite an employment arbitration clause, successfully arguing that he could not be compelled to arbitrate pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Former Financial Executive in Arbitration Over Resignation

Zuckerman Spaeder represented a former high-ranking executive of a financial institution in a confidential arbitration over the terms of our client’s resignation. We successfully established that our client’s resignation was for “good reason” under the terms of his employment contract, obtained a significant monetary award that included pre-judgment interest, and defeated the employer’s attempt to claw back a bonus previously paid to our client.

Cardiologists in Disputes with Former Employer over Alleged Violations Non-compete

Zuckerman Spaeder lawyers represented several cardiologists in disputes with their former employer over alleged violations of their covenants not to compete. The cases settled, and the former employer did not pursue non-compete claims against other physicians who left.

Honors

Civil Litigation

When an executive resigns or is terminated from a company, disputes often arise over severance pay, bonuses, stock options, and other forms of compensation and benefits. The company may claim, for example, that the executive is not entitled to any compensation or benefits under an employment or severance agreement because the executive was terminated “for cause,” which relieves the company from any further obligations to the executive. The executive may claim that, on the contrary, the termination was “without cause,” thus the company is obligated under the agreement to provide certain compensation and benefits, including, for example, severance payments, the vesting of stock options, and continued health care coverage. The company may also claim that the executive has breached promises in the agreement not to work for the company’s competitors or to protect the company’s sensitive information. In addition to these claims, the company and executive may dispute whether the company is required by contract or the company’s by-laws to advance the executive’s legal expenses incurred in litigating against the company.

Claims that are not based on contract but on statutes and the common law may also be made by players on both sides of the dispute, including claims for defamation, the conversion of property, the misappropriation of trade secrets, breach of fiduciary duties, and violation of pension rights. The employment agreement may require that the parties submit these types of disputes to mediation or to binding arbitration, which will affect the strategies of both sides.

Zuckerman Spaeder lawyers have successfully litigated these and similar issues on behalf of their clients and have also successfully litigated the scope and applicability of employee arbitration clauses for both employers and employees.

Our attorneys have significant experience in complex mediation and arbitration fora, and have secured nine-figure victories for their clients in arbitration under the auspices of the American Arbitration Association.

Experience

$5.3 Million Jury Verdict for Ousted Online Banking CEO

The firm brought a number of claims on behalf of the former CEO of a pioneering online banking company who had been forced out by a large investor. After an 11-day trial, our client was awarded a verdict of $5.3 million. The case was recognized by Virginia Lawyers Weekly as one of “Virginia’s Largest Verdicts of 2011.”

Former CEO in Arbitration Over his Employment Agreement

The firm was co-counsel to the former CEO of a public company in arbitration over the benefits due him under his employment agreement. The arbitration, which began in 2003, was suspended until 2010 while a complex criminal prosecution proceeded. The government contended that it could restrain and forfeit the client’s assets needed to pay his legal fees. Zuckerman Spaeder defeated that claim, along with the company’s argument that it only had to advance fees for the client’s Washington, DC and New York lawyers at “local rates." In 2011, on the eve of the final hearing, the arbitration was successfully concluded by an agreement providing the client approximately $40 million, including $3 million in reimbursed legal fees.

Former CEO of Large Real Estate Company in Dispute with Purchaser of Company

Zuckerman Spaeder represented the former CEO of a large national real estate company in a dispute with the purchaser of the company. The purchaser contended that our client had to reimburse bonuses that the company awarded him in prior years because the bonuses were based on earnings that were later restated. The dispute was mediated and eventually settled on terms favorable to our client.

Accountant Seeking Tort ‎Claims Against Former Employer After Being Kidnapped and Tortured Working Abroad‎

In 2008, Zuckerman Spaeder employees prevailed on behalf of plaintiff Azhar Khan’s rights to pursue his tort claims against his employer in court despite an employment arbitration clause, successfully arguing that he could not be compelled to arbitrate pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Former Financial Executive in Arbitration Over Resignation

Zuckerman Spaeder represented a former high-ranking executive of a financial institution in a confidential arbitration over the terms of our client’s resignation. We successfully established that our client’s resignation was for “good reason” under the terms of his employment contract, obtained a significant monetary award that included pre-judgment interest, and defeated the employer’s attempt to claw back a bonus previously paid to our client.

Cardiologists in Disputes with Former Employer over Alleged Violations Non-compete

Zuckerman Spaeder lawyers represented several cardiologists in disputes with their former employer over alleged violations of their covenants not to compete. The cases settled, and the former employer did not pursue non-compete claims against other physicians who left.

Counseling

In addition to our extensive litigation experience, we have provided expert legal advice to executives and companies who are contemplating the end of an employment relationship. In some cases, the departure is amicable, but in other cases the departure is under hostile circumstances. Zuckerman Spaeder lawyers have counseled executives who are thinking of leaving their current employer, working with them to devise a strategy to maximize their outgoing severance and bonus pay, and to facilitate a smooth and cordial exit in an environment of mutual respect rather than hostility. We have also counseled executives and companies in connection with the enforcement of post-termination rights and obligations, such as non-competition and indemnification agreements.